African Thoughts: July 01, 2013

The risk switch was turned on in the developed world last week as global markets looked to rebound after a recent slump and close the second quarter of the year on solid footing. African markets ended the week mixed and it was a rather tumultuous ride. As per usual, we take a look at some of the best and worst performing markets from across the continent.

Zimbabwe:

The market ended the week mixed in Zimbabwe with the Industrial Index falling 2.97% while the Mining Index gained 2.58%. Fears about the upcoming elections continued to weigh on the market last week as the court postponed the passing of a ruling on an application by government for the extension of the election to facilitate the implementation of proposed reforms. This was not only evident by the performance of the Industrial Index but by the lack of foreign interest in the market as turnover was dominated by one or two big block trades. There was a very large block trade in FBCH ($5.16m) on Friday and accounted for 46% of the week’s turnover. Econet and Delta were relatively quiet and only accounted for 9% and 18% of turnover for the week respectively.

Tanzania:

The Tanzanian market put in a solid performance last week with the All Share Index gaining a pleasing 0.81% to close at 1,582.51. This should however be taken with a pinch of salt as local investors accounted for 99.54% of activity with turnover slipping 73.56% to Tshs 3.49bn. CRDB and TPCC were the main drivers behind activity and together accounted for the bulk of the turnover for the week.

Kenya:

Profit taking continued in Nairobi last week as volumes fell (-34% to $25.34m) with the NSE 20 index falling -2.3%. There was a noticeable decrease in foreign activity which fell 77% for the week as foreign investor inflow amounted to $1.65m (a new low for the year). Kenya Commercial Bank was last week’s top mover and accounted for 27% of volume as foreigners were net buyers in the counter. There was however net foreign selling in Safcom with the name falling 3% to a 2 month low of KES 6.55. CIC Insurance is in talks with financiers for a KES 1.2bn capital injection to fund expansion into South Sudan and Uganda. The latest World Bank review of policies and institutions in Sub-Saharan Africa showed Cape Verde and Kenya having the highest scores on the continent.

Mauritius:

The downward spiral in Mauritius continued last week with the Semdex falling 0.9% to close at 1,914.64. The move lower came on the back of poor performances in the banking stocks with MCB reaching a low of 185.00 on Wednesday then later closing the week at 186.00 (-1.1%) while SBM fell 1.0% to close at 1.03. NMH also added to the negativity, closing the week at 70.25. MCB obtained approval to proceed with the issue of Rs3bn (or up to Rs4.5bn in the event of oversubscription) which will be listed on the official market by way of an offer for subscription.

Nigeria:

It was a very bumpy ride in Lagos last week and most certainly not for the faint hearted with the ASI falling 0.82%. After a severe bout of profit taking in the banking sector early in the week the Bank 10 Index manage to bounce off its lows as value seekers propped the sector up with the Index closing the week -2.28% lower. The sector was also the most active in the market and accounted for 58% of volumes with a number of large crosses in the like of Zenith Bank, Guaranty Trust Bank and First Bank. Consumer stocks were not spared in the sell-off either with the Consumer Goods Index falling 1.38% with the likes of PZ Cussons losing -5.20% to close at 39.80. It will be interesting to see how investors position themselves this week with the start of the third quarter and the seasonally slow months of July and August about to begin.